| Vale Added Modeling (a.k.a VAM) is one of the hottest | | | | cars that were not cost-effective. The result is the |
| topics in business today. VAM is used to find and | | | | collapses of the US auto industry. Because of this type |
| measure the most effective strategy, person, or | | | | of outcome, VAM is about sustaining customer |
| approach for getting a desired outcome. In discussing | | | | satisfaction so to ensure that customers will return or |
| the use of VAM, businesses often speak of finding | | | | the customer will lead to more sells. The best way to |
| innovative ways to do or conduct business effectively. | | | | ensure this result is by developing VAM that produces |
| Most often businesses feel that VAM is achieved by | | | | innovative services and/or products; and ways of |
| presenting innovative programs and techniques that | | | | measuring the effectiveness of services, service |
| reduce the noises that outside elements may cause | | | | delivery, and products over a period of time. |
| on desired outcomes without performing analysis to | | | | Why using statistics analysis is an important step in the |
| ensure value is effectively added. However, what is | | | | VAM process? |
| often lost when using VAM, is measuring the | | | | We have all seen list of 10 effective ways to make a |
| effectiveness of innovation. | | | | sale, or 10 effective ways to win customers. The |
| The classic example of VAM as an innovative | | | | burning question is how do we know the techniques |
| practice is the development of hybrid cars. The | | | | presented are effective? In social science research, |
| technology of combining gas and electric power claim | | | | we ask are these approaches valid and reliable? This |
| to produce a more energy efficient, fuel saving, and | | | | suggests, are these approaches accomplishing what |
| cost effective mode of transportation. While it may | | | | they claiming, and can we rely on these techniques |
| seem obvious that hybrid cars adds value to drivers' | | | | every time we go to make a sale. The best way to |
| life. Is the car indeed more cost effective than | | | | truly know if these approaches are effective is by |
| non-hybrid cars? If so, how much more effective are | | | | statistically measuring the effects of these approaches |
| hybrid cars? Is the effective of hybrid cars enough | | | | on actual sales made. |
| that drivers feel satisfied in the product? | | | | In a VAM sense, we want not only the measure the |
| On the innovative side of the argument, the hybrids | | | | effects of these techniques on sales, but to measure |
| seem to be a no brainer. However, the true answer | | | | these techniques on multiple person over a period of |
| will not occur until this value added technology is | | | | time. In additional, we want to eliminate factors that |
| measured over time. This is the beauty of VAM, which | | | | may bias the effectiveness of the 10 effective ways |
| suggest measuring the effects of factors on desired | | | | to make a sell. Let's say 5 of the 10 effective ways to |
| outcomes overtime. In this case, measuring if factors | | | | sale are 1) Networking, 2) Respecting client's time, 3) |
| associated with hybrid cars adds more value to the | | | | Listening to clients needs, 4) Product Knowledge, and |
| driver's lives. To understand the effectiveness of | | | | 5) Sell customer only what they need. To measure the |
| hybrids compared to different types of non-hybrid cars | | | | effectiveness of these techniques on sales growth |
| (gas-powered and diesel-powered), we must take into | | | | overtime, it is importance to only focus on measuring |
| account factors such as the cost of purchase, gas per | | | | the effects of techniques on sales by collecting data |
| mile, maintenance cost, and pollinates. | | | | associated with sales. So, do not measure things like |
| Given these factors, some have argued if hybrids are | | | | quality of product, product warrant, or specials |
| as good as the carmakers claim. Ann Job of MSN | | | | associated with the products. By uses these factors, |
| Autos reported that in a test by Consumer Reports | | | | you are not measuring the value added by the sales |
| magazine, which calculates its own fuel economy | | | | techniques. You are measuring the value of the |
| stats, noted that the Toyota Prius hybrid test car got | | | | product. Additional, but adding these factors, you can |
| 44 miles a gallon in real world driving, not the city | | | | bias the value of the sales technique. |
| highway rating of 55 mpg that the government reports. | | | | Further, if you are interested in measuring the |
| While 44 mpg is still lower than most cars and the | | | | effectiveness of an innovative product, think about |
| difference in the mpg of a hybrid is a reported 30% | | | | what sets you product a part from other similar |
| higher than like-sized non-hybrid; we still have to ask, | | | | products. Here, you do want to assess data |
| what is the true value added? For instance, comparing | | | | associated with the product and not data on the |
| the Primus to a VW Jetta TDI, is that there are | | | | approach of the salesperson. |
| greater value added on mpg. Further, Roy Rex of | | | | Keep in mind that statistically measuring the effects of |
| AOL Auto reports that hybrids are $1750 to $15,000 | | | | factors on desired outcomes are not as simple as |
| higher than like-size non-hybrid gas-powered cars. | | | | saying, in the first quarter the company sold ten |
| Even with tax breaks and some company incentives, | | | | products using the 10 techniques and this month the |
| is the difference in gas mileage enough to off set the | | | | company sold 15 products using these 10 techniques. |
| price difference between hybrid and non-hybrid | | | | Like the situation with the hybrid car, you are not sure |
| like-size cars? | | | | if all 10 techniques are effective, which technique |
| Another question is whether than is a greater | | | | produces the greater sales growth, or if a combination |
| difference between hybrid and diesel-powered cars | | | | of difference techniques produced the greatest sales |
| than between hybrid and gas-powered cars. The | | | | growth. |
| noticeable difference between hybrid and diesel cars is | | | | By developing effective or innovative approaches to |
| that hybrid cars are cleaner. But Ben Stewart of | | | | developing a better product is a start to VAM process. |
| popular motors explains, "today's diesels have been | | | | However, it is key that companies continue the VAM |
| engineered to burn cleaner while still delivering | | | | process by analyzing data to ensure that they |
| impressive mileage." This further brings to question, | | | | approach or product is 1) valued by the customer and |
| what is the true value of hybrid cars versus diesel | | | | 2) can be sustained over time. |
| cars? | | | | For companies wrestling with implementing VAM, |
| The point being made here is not that hybrid | | | | appropriate steps are needed to develop effective |
| technology does not provide more value. The point is | | | | VAM to your business. |
| that to truly understand the value added by this | | | | |
| innovative approach, we must complete the VAM | | | | 1. Brainstorm to understand the strengths and |
| process by measuring the effects of factors (cost of | | | | weaknesses of reaching your desired outcomes, |
| purchase, gas per mile, maintenance cost, and | | | | 2. Develop plans to build on your strengths and |
| pollinates) associated with hybrid cars against other | | | | improve on your weaknesses, |
| cars. In this process, we might find that the hybrid is | | | | 3. Develop measurable factors (what makes the new |
| strong in many areas, but lacking in other areas. | | | | improvements better) so to assess effects on your |
| Further more, while we can see how hybrids may add | | | | desired outcomes, |
| value to the driver's (customer's) life, VAM is more | | | | 4. Compare again benchmarks from prior years or |
| than just see what the customer values and producing | | | | quarters, and |
| a product based on that value. For years, the US auto | | | | 5. Use VAM statistical technical to determine if the |
| industry listened to customers and produced bigger | | | | method used for desired outcomes are total effective. |